Japan

Recent student protests in Japan against the Liberal Democratic Party’s (LDP) proposed changes to constitutional reinterpretation have Japan watchers asking ‘is the sleepy Japanese student waking up?’ However, what if they were never asleep or they were just waiting for the alarm clock to go off?

For a long time, historical and territorial disputes plagued relations between Japan and China. So far, the frictions show no sign of abating. Instead, Japanese Prime Minister Shinzo Abe has taken a nationalistic approach towards China. China has reportedly regularly intruded into Japanese territorial waters near the disputed Senkaku/Diaoyu islands and repeatedly demanded Japan to apologise for its wartime atrocities. These events have heightened tensions between the two countries.

On 27 August, Osaka Mayor Toru Hashimoto abruptly announced his resignation from the Japan Innovation Party (JIP). Hashimoto, who founded the party, has arguably been the single most important driving force behind the JIP’s electoral success and its emergence as the second-largest opposition party after the centre-left Democratic Party of Japan (DPJ). His resignation not only throws the party into disarray, but it could also usher in a wave of political realignment as Japan’s opposition parties respond.

In September 2013, Japanese Prime Minister Shinzo Abe pledged to create a society in which ‘all women can shine’. Abe acknowledged that women had long been an underutilised resource in the Japanese economy. He promised to boost female labour participation rates, increase the presence of women in corporate boardrooms and improve gender equality. Two years on, is ‘womenomics’ working in Japan?

Japanese Prime Minister Shinzo Abe’s much-anticipated statement to mark the 70th anniversary of the end of the Pacific War provoked relief, surprise and some ambiguity for the future. It was a relief because there had been some reports that Abe would go through with a cabinet decision to pull away from the position of the 1995 Murayama Statement, which was a clear apology to victims of Japan’s wartime aggression. That did not happen.

Japan reported a smaller than expected June current account surplus. Seasonally, June tends experience deterioration from May. In fact, only twice in the past ten years has the current account improved in June over May.

On the other hand, investors can look forward to improvement in July. Since 2003 without fail, Japan's current account position improved in July over June.

Japan is at a momentous turning point. On 16 July 2015, the government of Shinzo Abe used its big majority in the House of Representatives to override objections from opposition parties and pass legislation permitting collective self-defence (CSD). However, this is one of several misdirected solutions following years of conservative revisionism.

The yen has been on the sidelines this week. It is flat against the dollar. Japanese stocks and bonds are also little changed. The benchmark 10-year bond yield has fallen by less than two bp on the week, the least among the major bond markets.

When viewed through the lens of trade deals negotiated with the Association of Southeast Asian Nations (ASEAN), Australia, and the Trans-Pacific Partnership (TPP), Japan has shown recent willingness to engage in global free trade. However, is there any indication that these deals are striking a chord where it matters most, with Japan’s services sector, which comprises 70% of its economic activity?

Around the world, Japanese Prime Minister Shinzo Abe is perhaps most famous for his ‘Abenomics’ program to revive Japan’s economy. So far, it has not worked — mainly because it has not really been tried. Only the first of the famous ‘three arrows’ — monetary stimulus — has been fired. The indispensable third arrow, structural reform, remains lots of nice-sounding targets but little strategy to achieve them.